Karrass thenegotiating

CHESTER L. KARRASS
THE
NEGOTIATING
GAME
Thomas Y. Crowell, Publishers
Established 1834
New York

This book is dedicated to my wife, Virginia,
and our teenage negotiators, Lynn and Gary,
with whom we occasionally deadlock.

CONTENTS
LIST OF ILLUSTRATIONS ix
LIST OF TABLES X
INTRODUCTION xi
PART I. NEW FRONTIERS IN
NEGOTIATION
CluLpter 1. The Negotiating Society 3
.2. Winners and Losers 12
3· W1w,t Makes a Good Negotiator? .27
PART II. THE HEART OF THE
BARGAINING PROCESS
4· W1w,t's Your Aspiration Level? 41
5· You Have More Power TluLn You
Think 55
6. Men Who Influence 77
7· Inoculation Against Influence 91
8. Status 99
9· The Role of Role loS
10. Needs, Goals and Action 114

viii Contents
11. The Anatomy of Negotiation uS
1.2. The Expected-Satisfaction Theory 140
PART III. A PROGRAM FOR
PERFORMANCE
13· Strategy 149
14· Tact~,De~ckand
Countermeasures 110
15· The Successful Manager Negotiates 199
16. Love, Honor and Negotiate J.U
17· Organize to Win Your Obfectives J.U
18. The Wheel of Negotiation J.3J.
NOTES 1.37
ACKNOWLEDGMENTS 1.39
APPENDIX I J.4O
APPENDIX II J.4J.

LIST OF ILLUSTRATIONS
Figure 1. POWER AND NEGOTIATION OUTCOME 15
2. ATKINSON ASPIRATION MODEL 49
3· POWER AND PERCEPTION MODEL 65
4· PERSUASION MODEL 79
S· BARGAINING MODEL OF ROLE 110
6. MASLOw'S HIERARCHY OF NEEDS 116
7· GOALS, NEEDS AND PERCEPTION 121
8. TIME-PHASED NEGOTIATION MODEL 136
9· SATISFACI'lON MODEL OF NEGOTIATION 141
10. THE WHEEL OF NEGOTIATION 234

LIST OF TABLES
Table 1. GERMANY VS. ALLIES, RELATIVE BARGAINING
STRENGTH 9
2. NEGOTIATOR TRAIT RANK AND WEIGHTS 31
3· NEGOTIATION PLANNING-A THREE-
DIMENSIONAL VIEW 151
4· NEGOTIATION MANEUVERS 173
5· NEGOTIATION TECHNIQUES 184

INTRODUCTION
Despite the fact that man has· stepped on the moon and
harnessed the atom, he is still bargaining as he did in ancient
times. H a fl',e-thousand-year-old Babylonian were to dress in
a business suit and sit opposite us at the table, there is little
reason to believe his methods would differ from ours. It is as
though time stood still; as though the written word, the print-
ing press, management and the scientific method had never
been invented.
Incredible as it may seem, this is the first book to integrate
modem analytical thinking with good practice at the bargain-
ing table. It is the product of almost twenty years experience
.as a negotiator and three years of intensive research. The logical
methods developed are as applicable to lawyers and diplomats
as they are to buyers and sellers.
Negotiation is too serious a business to be treated super-
fiCially. This book will not guarantee that you will achieve
success by following a list of do's and don'ts. I have yet to
meet the experienced negotiator who attaches any importance
to such a list. In this book the subject is treated in a mature
and modem way. There is, after all, an explosion of new
ideas in every field. Why not negotiation?

xii Introduction
The book is divided into three parts. The first deals with a
large experiment involving professional negotiators. This study
sought to discover how skilled men achieved their objectives
not only when they had power but when they did not The
second part looks at the heart of negotiation by exposing to
your view elements such as power and aspiration level. These
basic building blocks of bargaining, if understood, can spell
the difference between good and mediocre performance. The
third part is concerned with the practical realities of negotiating
to win-through better strategy, tactics and organization.
This work is founded on the assumption that men who
negotiate know a good deal about their own business. They
know how to buy, how to write an airtight clause, how to
make a sale and how to conduct diplomacy. If they do not,
this is hardly the place to learn. I am assuming that it is
negotiation, not cost-analysis or legal doctrine, about which
the reader wants to know more. There is, therefore, one
emphasis only; and that is, to provide a practical method by
which men can negotiate more effectively to win their objec-
tives.

PART I
New
FrontIers
•
In
Negotiation

CHAPTERI
THE
NEGOTIATING
SOCIETY
AFTER AN ERA OF CONFRONTATION, THE TIME HAS
COME FOR AN ERA OF NEGOTIATION.
Richard M. Nixon
MANY OF THE PATTERNS AND PROCESSES WHICH CHARAC-
TERIZE CONFLICT IN ONE AREA ALSO CHARACTERIZE IT IN
OTHERS. NEGOTIATION AND MEDIATION GO ON IN LABOR
DISPUTES AS WELL AS IN INTERNATIONAL RELATIONS. PRICE
WARS AND DOMESTIC QUARRELS HAVE MUCH THE PATrERN
OF AN ARMS RACE.
/ouNUil of Conflict Resolution
Once upon a time there was a bear who was hungry and a
man who was cold, so they decided to negotiate in a neutral
cave. After several hours a settlement was reached. When they
emerged the man had a fur coat and the bear was no longer
hungry.
In life it is just as hard to determine whether the outcome
of a negotiation favors one party or the other. It is said that in
a successful negotiation everybody wins. Let us be realistic.

4 New Frontiers in Negotiation
In a 8flCcessful negotiation both parties gain, but more often
than not one party wins more than the other. In this book we
will find out why some people win and others lose; and why
losers make substantially larger concessions than necessary
while winners do not.
The potential for negotiation exists whenever men buy
and sell. Terms of sale may be open to discussion even when
price is not. For example, a purchasing executive whom I know
recently bought a new house in a wealthy development. When
he tried to negotiate price, he found the developer firm. After
moving in he learned that a neighbor had obtained better
credit terms. Despite long and successful experience in pur-
chasing, it Simply had not occurred to him that credit terms
were flexible in such a transaction.
Negotiation plays a subtle part in everyday affairs. At work
we bargain with supervision for high stakes.: Those successful
win a greater share of money, freedom and respect. Some
capable men are always told precisely what to do while others
are treated as thinking human beings. Some quiver at the sight
of authority while others hold their heads high and demand
a share of power. Some managers get work done by force
while others exert influence through persuasion, loyalty and
reason. A negotiation takes place whenever ideas are exchanged
for the purpose of influencing behavior.
It is said that a camel is a horse designed by a committee.
The Edsel was a manmade camel designed by negotiating
executives at the Ford Motor Company. Those who said it
would not sell did not prevail and a half-billion dollars was
lost. When executives meet to make decisions they represent
differing points of view and aspiration levels. The outcome,
as in all bargaining, is based upon power and bargaining
skill as well as logiC. It is well to remember that budgets
and schedules represent negotiated decisions between men who
have ;oint and conflicting interests.
Congress allocates funds for highways, construction

The Negotiating Society 5
projects and water programs. There is no Golden Rule that
specifies what is or is not fair; no simple formula determines
what share belongs to Idaho, Texas or California. Justice not-
withstanding, the allocation of federal funds is settled by hard
bargaining. In 1968 I read that a young Western Senator told
a reporter that he did not "give a damn" for President John-
son's Vietnam policy. The President reportedly retorted, "That
guy will give a damn when he tries to get a dam." Later in
the chapter we will learn of a politician who was probably
the worst negotiator of his time, and perhaps of all time.
Ninety percent ot. all lawsuits are settled out of court.
Some lawyers have high aspirations and thereby enrich their
clients; others do not. One lawyer may believe that a whip-
lash case is worth $3,000 while another may appraise.the same
case at $5,000. The critical role of bargaining skill and aspira-
tion level in determining settlement outcome will receive
detailed attention later.
Some businessmen are poor negotiators. They unknow-
ingly give away the store. The story that follows involves the
loss of a relatively large amount of money in only a few hours.
Because it is true, the company name has been changed to
protect those who still work there.
THE STARMATIC COMPANY
Years ago the aerospace industry was a lot better off
than it is today. When the Russians began the "space race"
with Sputnik in 1957, Americans were shocked. They realized
that President Eisenhower had made a poor decision in
scrapping space supremacy for economic reasons.
After Sputnik the people demanded action. This was good
news for those in the missile business. Since few suppliers
knew anything about this new technology, the government
was willing to spend money to teach them. Study contracts

were given to anyone who could spell "elliptical orbit."
President Kennedy, shortly after his inauguration, challenged
the Russians to a "moon race," thereby committing us for a
decade.
In 1961 the Hughes Aircraft Company received a large
contract to land the first unmanned space vehicle on the moon.
Since this had never before been tried, the contract was placed
on a cost-plus-fixed-fee basis. This meant that the company
would earn a fixed profit whether actual costs were 50, 100
or 500 million dollars. In theory a company has nothing to
gain by running costs up unnecessarily but may use a certain
amount of discretion in developing advanced deSigns. Spending
and technical progress is monitored by the government on a
continual basis.
Two years later design engineers decided to purchase
special power-generating equipment for the spacecraft. A bid
specification was written and submitted to four companies,
one of which responded. Starmatic Company bid $450,000 on
a firm fixed-price basis. The company had considerable experi-
ence producing less complex generating equipment.
For one month after the proposal was received, a series
of major spacecraft changes occurred that required design
re-evaluation. During that time the purchasing cost-analysts
were busy on other contracts and paid no attention to Star-
matic's proposal. As it turned out this was a dangerous over-
sight, for a management decision was made to award the
contract to Starmatic and begin negotiations immediately. I
was part of a three-man group assembled at 9:00 A.M. and
told to complete contract arrangements that day. There are
occasions in this business when time is so important that
savings in negotiation are more than offset by production-
delay costs. This was such a case.
An early afternoon meeting was arranged at the supplier's
plant. Three decisions were made enroute to the conference:
to be stubborn; to settle for $425,000 if posSible; and to offer

$140,000 initially. This was the full extent of our foolish
planning.
We soon learned that the opponent's team was in greater
disarray than our own. Their chief engineer was not conversant
with the original proposal and felt obliged to apolOgize for
his lack of detailed knowledge. The supplier's contract admin-
istrator and controller indicated that they had not reviewed
the proposal prior to the conference and asked for a short
delay in order to do so.
We requested accounting justification for the $450,000 bid
and were pleased .that the controller lacked this. He left
the room and returned almost thirty minutes later with an
armful of messy workpapers.
We continued to insist upon accounting justification and
began to realize that the estimating base was not likely to
be found in the books. Starmatic's cost system was no better
than that of the rest of the industry.
As bargaining went on the chief engineer left the room
several times in order to be present during critical acceptance
tests. It was apparent that he preferred to solve technical
problems rather than discuss price. The contract man was
also interrupted a number of times with urgent questions from
subordinates relating to other proposal work being done.
Late that afternoon Starmatic had reduced its price to
$375,000. By mid-evening they further reduced it to $300,000.
The contract was settled at midnight for $220,000. Both parties
were pleased. To the best of my knowledge Starmatic suffered
no loss on the job, but will never know that they threw away
over $200,000 at the table. The Starmatic negotiators aspired
to little; little is what they got.·
• On June 2, 1966, Surveyor, designed and developed by the
Hughes Aircraft Company, made a perfect soft landing on the moon.
It was the first unmanned space vehicle to perfonn such a difficult feat
and paved the way for man's exploration of the planets. The work was
accomplished within a small percentage of estimated cost and sub-
stantially on schedule.

THE RAPE OF CZECHOSLOVAKIA
The inability to bargain effectively can result in con-
sequences far beyond the mere loss of money. In 1938, Prime
Minister Chamberlain did an incredibly poor job at Munich.
For three years Hitler had taken spectacular gambles and won.
Against the advice of his generals, he had rearmed the
country, rebuilt the navy and established a powerful air force.
Hitler correctly sensed that the British and French wanted
peace desperately, for they had chosen to overlook German
rearmament and expansionism. Encouraged by success,
Germany applied pressure on Austria and occupied the country
early in 1938. Czechoslovakia was next.
Hitler was not fully satisfied with earlier victories, as they
had been bloodless. He yearned to show the world how
powerful Germany was by provoking a shooting war, and he
did this by making impossibly high demands on the Czech
Government for German minority rights and by establishing an
October 1, 1938, war deadline. It was a ridiculous gamble.
As shown in Table 1, relative bargaining strength was
overwhelmingly in favor of the Allies on September 27, 1938.1
Hitler was aware of his weakness and chose to win by nego-
tiation what could not be won by war. The follOwing events
indicate why he was optimistic:
1. On September 13, Chamberlain announced a willing-
ness to grant large concessions if Hitler would agree to
discuss issues.
2. On September 15 the aged Prime Minister of Great
Britain made a grueling journey to meet Hitler deep in eastern
Germany. Hitler had refused to meet him halfway.
3. Hitler opened the conference by abUSing Ch~berlain
and by making outrageously large demands for territory, to
which the leader of the Western world immediately agreed.

4. Hitler was aware that Chamblerlain spent the next
four days convincing the French that Germany could be
trusted. The Czechs were bluntly told not to be unreasonable
by fighting back.
5. On September 22, Chamberlain Hew back to eastern
GERMANY VS. ALLIES
RELATIVE BARGAINING STRENGTH. Table 1
THE GERMAN POSITION
1. German generals reported
that the Czechs were deter-
mined to fight. They told
Hitler that Czech fortifica-
tions were sufficiently strong
to repulse the Germans even
without military help from
France and England.
z. German intelligence reported
that French and Czech to-
gether outnumbered the
Nazis two to one.
3. The General StaH reported
only twelve German divisions
available to fight the French
in the west.
4. In Berlin a massive parade
was staged. William L. Shirer
reports that less than zoo
Germans watched. Hitler at-
tended and was infuriated
by the lack of interest.
5. German Intelligence reported
that Mussolini had privately
decided not to assist Hitler.
6. German diplomats reported
that world opinion was over-
whelmingly pro-Czechoslo-
vakian.
THE ALLIED POSITION
1. A million Czechs were ready
to fight from strong moun-
tain fortresses.
z. The French were prepared to
place 100 divisions in the
field.
3. Anti-Nazi generals in Ger-
many were prepared to de-
stroy Hitler if the Allies
would commit themselves to
resist the Czech takeover.
4. British and French public
opinion was stiffening against
Germany's outrageous de-
mands.
5. The British fleet, largest in
the world, was fully mo-
bilized for action.
6. President Roosevelt pledged
aid to the Allies.

Germany and offered Hitler more than he asked for. Hitler
was astounded but nonplussed. He raised his demands.
6. Chamberlain returned home to argue Hitler's cause
while the German leader made public announcements that
war would start October 1 if his moderate demands were not
granted.
When the two men met on September 29, Hitler had
little doubt of victory. Mussolini acted as mediator (imagine
thatl) and proposed a small compromise, which was quickly
accepted by both parties. And in a few months Czechoslovakia
ceased to exist. Chamberlain, businessman turned politician,
had lost the greatest negotiation of all time. As a consequence,
25 million people were soon to lose their lives.
WHO SHALL NEGOTIATE?
We have a right to know more about the men who rep-
resent us in international and business negotiations. Was the
mortally ill Franklin D. Roosevelt the best choice at Yalta?
Were Averell Harriman or Henry Cabot Lodge the best men
for Paris? Does Roy Ash negotiate effectively when he pur-
chases new companies for the Litton conglomerate? Does he
pay far more for acquisitions than is necessary? In business
as in diplomacy it may take years to recognize a poor agree-
ment
In chOOSing an attorney for a divorce or negligence case it
may be wiser to select one who can bargain effectively than
one deeply versed in legal technicalities. Most such cases do
not involve complex legal issues. The business manager who
represents an entertainer may not be a good negotiator even
though he has the performer's best interest at heart. The
agent may have too low a level of aspiration or too high a
regard for those in power to bargain effectively.

President Nixon spoke of an "era of negotiation" in his
acceptance speech. We enter such an era in all aspects of
life from buying and selling to raising children. The children
of tomorrow must be good negotiators. They must be prepared
to resolve differences in a civilized way: to listen; to be respon-
sive; and to be unafraid to adjust conflicting values. The
alternative in an age of rising expectations is violence.
THE RIDDLE CALLED NEGOTIATION
Several years ago, after twenty years in industrial procure-
ment and contracts, I was prOvided the opportunity through
a Howard Hughes Doctoral Fellowship to pursue advanced
studies at the University of Southern California. My disserta-
tion consisted of a three-pronged attack on negotiation: ana-
lytical, experimental and opinion-sampling. Its goal was to
answer the question "What determines the outcome of a
negotiation?"
The purpose of thought is action. What follows in this
book are practical ideas based on research. Leo Durocher, the
feisty baseball manager, once said, "Nice guys don't win." I
disagree. In negotiation, as in life, nice guys do win: They
gain their objectives when they know what they are dOing.
It matters not if they are buyers, salesmen, politicians, lawyers
or diplomats-or ballplayers. The principles are the same.

CHAPTER 2
WINNERS
AND
LOSERS
"FOR EXAMPLE" IS NO PROOF.
Proverb
WHAT AN INDIVIDUAL TlUNKS OR FEELS AS SUCCESS IS
UNIQUE TO HIM.
Alfred Adler
WHEN YOU CANNOT MEASURE IT, WHEN YOU CANNOT EX-
PRESS IT IN NUMBERS, YOUR KNOWLEDGE IS OF A MEAGER
AND UNSATlSFAcrORY KIND.
Lord Kelvin
The tale of Adam and Eve describes the first negotiation. We
have yet to learn the outcome of that exchange. Although men
have engaged in trade for over five thousand years, the
literature of negotiation contains almost nothing but anecdotes
and cchome brewed" prescriptions of doubtful value. In today's
complex world, cc 'for example' is no proof." We need something
more substantial than anecdotes. In the past few years a

Winners and Losers 18
handful of men have begun to adopt methods of disciplined
lOgic and experimentation to this ancient profession.
When I first became seriously interested in negotiation I
was intrigued by the paradox of power. I had seen buyers
with little power confront sole-source suppliers with great vigor
while other men under similar circumstances scraped and
bowed. Many of us could not understand how Ho Chi Minh
of Vietnam was willing to fight the United States. I began
to wonder why some negotiators are intimidated by power
while others are not
Skill was another area of mystery. Most of the literature
said that it was better to be skilled than unskilled. Many
suggested that certain traits were essential to success. None
suggested that it was possible to measure skill or evaluate the
relative importance of one trait over another.
From experience it was easy to predict that skilled men
would outperform those less skilled. Yet I could not help but
wonder whether the difference in the amount of skill between
opponents would aHect the final outcome. I also wondered if it
really mattered whether or not a negotiator with power was
skilled. In my experience some very marginal buyers who
held power had returned from conferences with good agree-
ments.
The question of concession pattern was puzzling. Some
professionals preferred to get right to the point while others
compromised with reluctance, or not at all. Very little in the
literature supported either viewpoint.
What emerged from all this was a series of questions that
go to the heart of negotiation. Many had never before been
tested. An experiment was designed to find answers of practical
value. It was the first to explore the relationship between
power, skill and outcome. It was also the first to use over
one hundred profeSSional buyers and sellers as experimental
subjects and to measure their skill in objective terms.

These are the eight questions that the experiment sought
to answer:
1. IS THERE A RELATIONSHIP BETWEEN ASPIRATION LEVEL
AND SUCCESS?
2. DO WINNERS HAVE A DIFFERENT CONCESSION PA'ITERN
THAN LOSERS?
3. IS POWER EXPLOITED DIFFERENTLY BY SKILLED AND
UNSKILLED NEGOTIATORS?
4. DOES THE SKILL OF A NEGOTIATOR DETERMINE OUT-
COME?
5. CAN SKILLED NEGOTIATORS ESTIMATE WHAT AN OP-
PONENT WANTS BETTER THAN THOSE LESS SKILLED?
6. IS SETTLEMENT TIME RELATED TO SUCCESS?
7. HOW ARE DEADLOCK, SUCCESS, AND FAILURE RELATED?
8. DO SUCCESSFUL AND UNSUCCESSFUL NEGOTIATORS RE-
PORT EQUAL SATISFACTION WITH A FINAL AGREEMENT?
The most difficult part of the project was to design a
method for measuring skill. It was somewhat easier to control
power systematically, and to measure outcome and success
in an objective way. How this was accomplished will be de-
scribed briefly.0
THE METHOD
One hundred and twenty professional negotiators from
four major aerospace companies volunteered to participate in
the experiment. As buyers, subcontract administrators, contract
managers and termination specialists, they represented the
buying and selling side of the industry.
Each man was pre-evaluated by two of his managers
• For a detailed account of methodology the reader is directed to
the dissertation "A Study of the Relationship of Negotiator Skill and
Power as Determinants of Negotiation Outcome," Chester L. Karrass,
University of Southern California, Los Angeles, California, 1968.

along a scale consisting of forty-five separate bargaining traits.
Each trait was individually weighted on the basis of a survey
of high-level purchasing executives. For example, the survey
revealed that executives assigned a 15.0 weight to planning
ability and a 1.2 weight to stamina. Neither managers nor volun-
teers were aware of the rating system or relative trait weights.
Negotiator trait scores were determined by a computer.
Prior to the experiment all subjects were matched in sets
according to trait score. Opponents met for the first time in
a private office where they were given a plaintiff- or defense-
attorney kit, which contained some information known to both
$600
($518)
500
Skilled men
did not improve ($498)
400 ...............1$429)
..........
..........
300 ..........
...............Unskilled men
............... improved greatly
200 ($198)
100
o~----------------------~--
X
Equal
power
Plaintiff power ~
y
Superior
plaintiff
power
Figure 1. POWER AND NEGOTIATION OUTCOME

parties and some data of a private nature. Volunteers were
provided thirty minutes to study the case, after which a bell
rang commencing negotiation. H agreement was not reached
within sixty minutes, the session was scored as a deadlock.
The bargaining involved a lawsuit between a drug com-
pany and a plaintiff who suffered damage to his eyes after
taking a drug. The plaintiff sued for slightly more than a
million dollars.
Two power variations were used. In the first the balance
of power was approximately equal. In the second the power bal-
ance favored the plaintiff. In addition a small sample of
coached unskilled defendants in the second group were induced
to be aggressive in the face of their more powerful and skilled
opponents. It was possible to create power imbalance simply
by changing the number of precedent court decisions and by
adding a degree of uncertainty to the equal-power variation.
The information obtained from the experiment included
settlement amount, settlement time and concession history. In
addition both parties were asked to record their own objectives
and their estimates of the opponent's objectives. This informa-
tion was recorded twice: at the beginning and midpoint of the
negotiation. Twenty students and a university professor were
on hand to answer questions and assure that forms were
properly completed.
SUMMARY OF TERMS
The experimental results that follow can best be under-
stood if a few basic terms are defined.
NEGOTIATOR TRAIT SCORE - Manager rating of negotiator
SKILLED NEGOTIATOR - Negotiator whose trait score is
above median

Winners and Losers
UNSKILLED NEGOTIATOR - Negotiator woose trait score
is below median
SUCCESSFUL PLAINTIFF - A settlement above the plain-
tiff average
SUCCESSFUL DEFENDANT - A settlement below the de-
fendant average
GAME "x" - Equal plaintiff and defendant
power
GAME "yP - Plaintiff with superior power
ASPIRATION LEVEL--RESULTS
17
QUESTION - Is there a relationship between aspiration
level and success?
1. FINDING - PERSONS WITH mGlIER ASPIRATION LEVELS
WON mGlIER AWABDS.·
This is probably the most important finding in the experi-
ment. Winners started out wanting more and ended by getting
more.
2. FINDING - SKILLED NEGOTIATORS WITH mGH ASPIRATION
LEVELS WERE BIG WINNERS REGABDLESS OF WHETHER THEY
HAD POWER.·
One group won in almost every case: skilled negotiators
with high aspirations. They were successful even when they
had less power. A combination of ability and high aspirations
appears to lead to success.
3. FINDING - PERSONS WITH mGH ASPIRATIONS WERE WIN-
NERS IN EVERY CASE WHERE THEY OPPOSED LOW ASPIRANTS.
o Wherever a finding is followed by an asterisk, it is to indicate
that the level of significance is less than .05. Where the word "tend"
is used in a finding, the level of significance is less than .10.

IT DID NOT MATrER WHETHER THEY WERE UNSKILLED OR HAD
LESS POWER.·
When a man is lucky enough to face an opponent with
low aspirations he is certain to win a great deal if he sets his
goals high.
4. FINDING-THE MORE SKILLED THE NEGOTIATOR WITH-
OUT POWER, THE LOWER WAS HIS ASPIRATION LEVEL.·
Highly skilled men who lacked power became pessimistic
and lowered their aspiration level. The unskilled who lacked
power were more optimistic and did not reduce their aspira-
tions. Perhaps they were more oblivious to reality.
CONCESSION BEHAVIOR-RESULTS
QUESTION- Do winners have a different concession
pattern than losers?
1. FINDING - LARGE INITIAL DEMANDS IMPROVE THE
PROBABILITY OF SUCCESS.·
It appears that those who give themselves room to com-
promise are more successful with people who open with a
reasonable demand. Some students on American college
campuses seem to have anticipated this finding. Certainly their
demands are high enough. In one sense the backlash in various
state capitals represents high demands in the other direction.
2. FINDING - LOSERS MAKE THE LARGEST CONCESSION IN
A NEGOTIATION.·
Winners almost never made the largest single concession.
Lawyers in particular may be interested in the fact that
successful defendants did not make the largest concession in
any negotiation.

3. FINDING - PEOPLE WHO MAKE SMALL CONCESSIONS
DUBING NEGOTIATIONS FAIL LESS.0
Those players who were obstinate-that is, those with low
concession rates-rarely lost. They either deadlocked or won.
4. FINDING-LOsEBS TEND TO MAKE THE FIRST COMPRO-
MISE.
Successful bargainers force the opponent to offer the first
concession. There were several deadlocks without a concession
on either side.
5. FINDING - SKILLED NEGOTIATORS MAKE LOWER CON-
CESSIONS AS THE DEADLINE APPROACHES.0
As pressure mounts, skilled men appear to have greater
control of their concession behavior than do unskilled men.
The unskilled bargainer made astounding concessions as the
deadline approached. Many held firm through the session only
to yield large dollar amounts at the last moment
6. FINDING-A VERY mGH UNEXPECrED INITIAL DEMAND
TENDS TO LEAD TO SUCCESS RATHER THAN FAILURE OR DEAD-
LOCK.
In this experiment both parties were told that the plaintiff
was to make an initial demand of $1,075,000. A few plaintiffs
chose to start at $2 million. They won handily. Unfortunately,
only seven men tried this sophisticated form of "low-balling."
Five won heavily, one deadlocked and one lost-but did quite
well for a loser. The number of cases is not large enough to be
Significant but deserves further study.
Sellers are surprisingly successful when they raise an
initial proposed price based upon so-called new information.
This technique tends to force the buying team into the position
of begging the seller to be reasonable-that is, to accept his
original asking price. Hitler used the same tactic against
Chamberlain and succeeded in winning almost all of Czecho-

slovakia instead of the smaller territory he had originally
demanded.
EXPLOITATION OF POWER-RESULTS
QUESTION - Is power exploited differently by skilled and
unskilled negotiators?
1. FINDING - UNSKILLED NEGOTIATORS IMPROVED WHEN
THEY HAD MORE POWER, BUT SKILLED NEGOTIATORS DID
NOT.·
This result was surpnsmg. Figure 1 shows the large
improvement made by unskilled· bargainers. The average
settlement of the unskilled rose from $lgS,OOO to $429,000 when
they gained power.
2. FINDING - THE DIFFERENCE IN PERFORMANCE BETWEEN
SKILLED AND UNSKILLED NEGOTIATORS BECOMES LESS WHEN
BOTH POSSESS GREATER POWER THAN THEm RESPECflVE OPPO-
NENTS.
Figure 1 shows how bargaining skill becomes less impor-
tant as more power is acquired. H plaintiff power had been
increased still more, it is possible that unskilled plaintiffs might
have outperformed those with skill.
3. FINDING - SKILLED NEGOTIATORS WITH POWER WERE
BENEVOLENT TO UNSKILLED OPPONENTS.
Skilled plaintiffs with equal power scored $518,000. When
they had more power they scored only $498,000. Obviously
they did not exploit their new-found power. However, in those
cases where they faced coached defendants who were told to
be aggressive, they apparently became concerned enough to
improve the settlement to $574,000. Unfortunately, the coached
sample was not large enough to be meaningful.

SKILL AND SUCCESS UNDER EQUAL POWER-
RESULTS
QUESTIONS - A) Does the 8kill of a negotiator deter-
mine outcome under equal power?
B) Does the difference in the amount of
8kill between opponents determine
outcome under equal power?
1. FINDING-THE MORE SKILLED THE NEGOTIATOR, THE
MORE HE WON. TRAIT SCORE WAS CORRELATED WITH OUT-
COME.·
Under equal power, bargaining skill was a critical factor
in determining final outcome: the best men obtained the high-
est settlements. Figure 1 shows that skilled plaintiffs under
equal power received $518,000, while unskilled plaintiffs
averaged a mere $198,000.
2. FINDING -THE LARGER THE DIFFERENCE IN THE AMOUNT
OF SKILL BETWEEN OPPONENTS, THE MORE THE SKILLED MAN
WON AGAINST AN ADVERSARY OF EQUAL POWER.·
Skilled men outperform unskilled men when they have
equal power. When skilled men are fortunate enough to oppose
those with far less ability, they manage to do even better.
SKILL AND SUCCESS UNDER UNEQUAL
POWER-RESULTS
QUESTIONS - A) Doe8 the 8kill of a negotiator deter-
mine outcome under unequal power?
B) Doe8 the difference in the amount of
8kiU between opponent8 determine
outcome under unequal power?
1. FINDING - SKILLED PLAINTIFFS WITH POWER WERE ONLY

SLIGilTLY MORE SUCCESSFUL THAN UNSKILLED PLAINTIFFS
WITH POWER.
Skilled and unskilled men with power performed almost
equally well. Figure 1 shows that skilled men averaged $498,-
000 while unskilled men averaged $429,000. This difference is
negligible.
2. FINDING - UNDER UNEQUAL POWER THE DIFFERENCE IN
THE AMOUNT OF SKILL BETWEEN OPPONENTS WAS UNIM-
PORTANT EXCEPT AS FOLLOWS:
a) THE MORE INFERIOR THE LESS SKILLED NEGOTIATOR (WITH
POWER), THE MORE HE EXPLOITED HIS SKILLED OPPO-
NENT.·
b) THE MORE SUPERIOR THE SKILLED NEGOTIATOR (WITH
POWER), THE MORE HE TENDED TO BE BENEVOLENT.
Two strange results occurred. In test a), unskilled men
with power exploited opponents with far greater skill to a
larger extent than those more on their own level. Perhaps this
is what happened in Germany under Hitler when hoodlums
acquired power. In test b), skilled men with superior power
tended to be more benevolent to opponents who were quite
inferior, but were less benevolent to those on their own skill
level.
ESTIMATING RESULTS
QUESTION - Can skilled negotiators estimate what an
opponent wants better than those less
skiUedP
1. FINDING - SKILLED AND UNSKILLED NEGOTIATORS ESTI-
MATE THE WANTS OF AN OPPONENT POORLY. BOTH ESTIMATED
THE WANTS OF AN OPPONENT ON THE BASIS OF THEIR OWN
WANTS, NOT THE OPPONENT's.·
Even when a skilled negotiator attempts to estimate what

the other party wants, he fails because he perceives the situa-
tion in terms of his own desires. The correlation between what
a negotiator himseH wanted and what he thought the opponent
wanted was very high. The fable among negotiators that a good
man knows what the opponent really wants was not confirmed.
SETTLEMENT TIME-RESULTS
QUESTION - Is settlement time related to success?
1. FINDING - EXTREMELY QUICK SETTLEMENTS RESULT IN
EXTREME OUTCOMES. 0
Quick settlements resulted in very high or low outcomes
rather than agr~ements in the middle range.
2. FINDING - SETTLEMENT OCCURS SHORTLY BEFORE DEAD-
LINE. 0
A significant number of settlements occurred in the last
five minutes of bargaining. The establishment of time limits
apparently forces agreement.
3. FINDING - EXTREMELY QUICK SETTLEMENTS TEND TO
FAVOR SKILLED NEGOTIATORS.
Although the data is insufficient to be conclusive, skilled
men won most quick settlements. Further research is neces-
sary to determine whether negotiations of long duration are
won by skilled bargainers.
DEADLOCK-RESULTS
QUESTION -How are deadlock, success, and failure re-
lated?
1. FINDING - PERSONS WITH EXTREMELY mCH ASPIRATIONS
FAIL LESS. THEY SUCCEED OR DEADLOCK MORE OFTEN THAN
THOSE WHO WANT LESS.0
Plaintiffs who aspired to $750,000 or more rarely lost.

They achieved high settlements or deadlocked in the process.
A man who wants to buy a $20,000 house in a $50,000 neigh-
borhood may never find one. But if he buys a livable house, it
will surely be a bargain. In life, a man who aspires to great
heights has a better chance of success than one who does not,
provided he doesn't get a "nervous breakdown" in the process.
2. FINDING - PERSONS WITH EXTREMELY mGH ASPIRATIONS
WHO POSSESS POWER SUCCEED PHENOMENALLY IF THEY DO
NOT DEADLOCK. 0
Powerful plaintiffs who aspired to $750,000 or more
achieved average outcomes of $649,000. Powerful plaintiffs
who aspired to less than $750,000 averaged only $370,000.
However, almost half of the high aspirants deadlocked.
3. FINDING - OBSTINATE PERSONS DEADLOCK MORE FRE-
QUENTI..Y THAN CONCILIATORY PERSONS, BUT FAIL LESS.0
Persons who conceded in very small amounts were either
successful or they deadlocked. They rarely failed.
4. FINDING-WHERE ONE OR BOTH PARTIES HAVE EX-
TREMELY mGH ASPIRATIONS THE PROBABll.lTY OF DEADLOCK
IS mGHER THAN IF NEITHER PARTY HAS mGH ASPIRATIONS. 0
A high-aspiration negotiator is successful when he meets
an opponent with low aspirations. If, however, the opponent
also has high aspirations, deadlock frequently occurs. When
both parties have moderate aspirations, deadlock is not likely
to occur.
SATISFACTION WITH AGREEMENT-RESULTS
QUESTION - Do successful and unsuccessful negotiators
report equal satisfaction with a final agree-
ment?
1. FINDING - WINNERS AND LOSERS EXPRESSED EQUAL SATIS-
FACTION.

Both parties reported equal satisfaction with the outcome
even when one did exceedingly well and the other poorly. In
real life most people appear to express satisfaction with the
outcome of a negotiation even when we as outside observers
consider the outcome one-sided.
PUTTING THE EXPERIMENT TO WORK
As practical men of action, each of us feels a need to put
newly found knowledge to work on today's opportunities.
The major findings of this experiment will provide the nego-
tiator and his top management with some new ways to look
at age-old challenges.
First, we discovered that skilled negotiators were very
successful when they had high aspirations or were lucky
enough to face unskilled opponents with equal power.
Second, we found that skilled negotiators were benevolent
when they had power.
Third, we found that unskilled negotiators were losers
except when they had power and high aspirations.
Fourth, we discovered that successful negotiators made
high initial demands, avoided making first concessions, con-
ceded slowly and avoided making as many large concessions
as did their opponents.
Fifth, our results indicate that successful negotiators used
concession in a dynamic way. They applied the above tech-
niques to test the validity of their own assumptions and the
intent of the opponent. Losers did not test reality in the same
way. Both were equally poor estimators.
Sixth, all negotiators, successful or not, expressed equal
satisfaction with the final agreement.
An experiment is not reality. Although the subjects fought
hard, little was at issue except personal pride-money, posi-
tion and public honor were not at stake. Perhaps it was the

fact that they were professionals that caused them to bargain
as seriously as they did. But one can never be sure that men
will do their best work under game conditions. On the other
hand, those who negotiated for the Starmatic Company in
Chapter 1 were not as serious about a real-life situation as they
should have been.
Make no mistake, this experiment is but a minor link in a
growing chain of knowledge. With experimental and analytical
work of the highest order conducted by social scientists and
economists, each passing day provides new insight into the
negotiation process.

CHAPTER3
WHAT
MAKES A GOOD
NEGOTIATOR?
USE SUCH PERSONS AS AFFEGr THE BUSINESS WHEREIN
THEY ARE EMPLOYED; FOR TIlAT QUICKENETH MUCH:
AND SUCH AS ARE FIT FOR THE MATTER; AS BOLD MEN
FOR EXPOSTULATION, FAIR-SPOKEN MEN FOR PERSUASION,
CRAFTY MEN FOR INQumy AND OBSERVATION, AND AB-
SURD MEN FOR BUSINESS TIlAT DOTH NOT WELL BEAR
OUT ITSELF. USE ALSO SUCH AS HAVE BEEN LUCKY, AND
PREVAILED BEFORE IN THINGS WHEREIN YOU HAVE EM-
PLOYED THEM: FOR TIlAT BREEDS CONFIDENCE, AND THEY
WILL STRIVE TO MAINTAIN THEm PRESCRIPTION.
Sir Francis Bacon
THE FAULT, DEAR BRUTUS, IS NOT IN OUR STARS, BUT IN
OURSELVES••••
Shakespeare
.......
What are the traits of an effective negotiator? How do the
opinions of buyers, salesmen, engineers, contract managers and
purchasing executives differ in this regard? Do attorneys,
accountants, retail buyers and real-estate salesmen see a nego-
tiator in the same light?
To get answers, three opinion polls were conducted among

these groups. In addition, the literature of diplomacy, business
and collective bargaining was probed for a deeper insight
into the personality makeup of successful men in general. As
a result of these studies we are now able to do two things
that could not be done before: 1) measure bargaining skill
objectively, and 2) understand how the attitudes of these vari-
ous professional groups differ with respect to the qualities
necessary for a first-rate negotiator.
Newsweek recently described Arthur Goldberg as follows:
'(1) Very likable, 2) very knowledgeable, 3) catches on very
quickly, 4) penetrates the real issues, 5) is resourceful and 6)
is persuasive."2 It would be nice if all of us were so blessed.
Yet, the list leaves questions unanswered. Is knowledge as im-
portant as catching on quickly, or three times as important?
Is persuasiveness less valuable than resourcefulness? Few
men possess all these traits in equal abundance. Which, if any,
can be compromised? Could a man be effective if he were
not knowledgeable but possessed other attributes?
To further complicate the matter, the Goldberg list might
well have included such qualities as patience, self-control,
confidence and planning ability, for these are traits men rightly
value. For centuries diplomats and businessmen have wrestled
with the question of ideal traits in their search for the perfect
ambassador or executive. It is not surprising that the character-
istics of both are almost identical, for they spend much of their
time negotiating.
HOW BUSINESSMEN LOOK AT EXECUTIVE
TRAIT S
Frederick W. Taylor, the father of scientific management,
discovered an unusual solution to the problem of finding an
ideal executive. He suggested that an employee be supervised
by eight men rather than one. In his theory, each functional

What Makes a Good Negotiator? 29
supervisor would apply those qualities and special skills neces-
sary to do the job. Managers laughed at the idea in 1900 and
are still laughing today, but not quite as heartily. The idea
appears less absurd in this modem age of extreme specializa-
tion. One has only to look at procedure manuals to note that
personnel, purchasing and other staff specialists exert direct
influence on the behavior of men engaged in line activities.
Today's worker takes orders from not eight but perhaps eight-
een staff specialists.
While there continues to be controversy among business-
men, a few executive traits emerge as most essential. Execu-
tives should be achievement-oriented, decisive, intelligent,
well organized, imaginative, confident, sensitive and tolerant
of uncertainty. Needless to say, on this basis few of us are
likely to be overqualified.·
AMBASSADORS LOOK AT DIPLOMATIC TRAITS
The relationship between diplomacy and negotiation is
so close that Webster's defines diplomacy as "the practice of
conducting negotiations between nations." Diplomatic litera-
ture is rich in perceptive observation and examples. Sir Harold
Nicolson, a respected English diplomat, summarized the
modem viewpoint by listing seven special qualities necessary
to a skillful emissary: truthfulness, moral accuracy, calmness,
tolerance, patience, dignity and loyalty. In addition, he assumes
that the diplomat will also possess a high degree of intelligence,
knowledge, discernment, prudence, charm and courage. Nicol-
son's view does not differ much from the ideas expressed cen-
turies earlier by French and Italian diplomats.s
Until recently there has been little serious trait research
done. Perhaps due in part to the "Ugly American" image
abroad, government grants have been prOvided to focus dis-
ciplined attention on diplomatic qualities. In California a

group of social scientists have used computers to conduct stud-
ies relating bargaining behavior to personality. They have de-
veloped a personality-attitude test that measures such traits
as aggressiveness, risk-avoidance, self-control and suspicious-
ness. There is preliminary evidence that such measures are
related to outcome.4 For example, bargaining pairs composed
of persons scoring high in conciliation and risk-avoidance
achieved higher total payments for both parties than pairs
composed of persons low in these traits. Further research is
likely to provide greater insight and thereby improve our
ability to select good diplomats.
THE FIRST SURVEY-SENIOR PURCHASING
EXECUTIVES
An experiment that attempts to find a relationship between
ability and outcome is likely to be meaningless unless skill
can be measured objectively. It was not enough to match men
on the basis that they were good or bad or in-between. In
order to apply a numerical measure to ability, three answers
were necessary:
1. Which traits are important?
2. How does each trait rank in importance?
3. How much more important is one trait than another
(weight)?
A decision was made to obtain :tnswers by taking a survey
of high-level purchasing executives-that is, men who have
themselves engaged in large transactions and commanded sub-
ordinates as well.
Prior to the survey, traits were divided into six' clusters,
each containing seven or eight attributes. Included among the
Task-Performance traits were stamina, planning, knowledge,

problem-solving and goal-striving. The Aggression group in-
cluded the ability to perceive and exploit power, persistence,
courage, leadership, competitiveness and risk-taking behavior.
Socializing qualities were represented by sense of humor,
personal attractiveness, interpersonal integrity and cooperative-
ness. The Communication cluster consisted of skills associated
with verbal and nonverbal expression: listening, debate and
role-playing ability. Self-Worth attributes included the ability
to win the confidence of one's opponent as well as one's su-
perior, personal dignity, self-control and self-esteem. In the
Thought-Process cluster were judgment, insight, decisiveness
and ability to think clearly under pressure. A total of 45 traits
were represented in the six categories.
Twenty-six senior executives were asked to rank traits
within clusters from most to least essential. In addition, they
chose four traits among the 45 as most important. From the
response it was possible to answer the question of trait rank
and weight. For instance, planning skill was found to be thir-
teen times as important as stamina and almost twice as im-
portant as individual initiative or problem-solving ability. The
ability to express thoughts verbally was considered almost twice
as valuable as debating ability. Insight was ten times as
beneficial as education and considerably more essential than
experience. Data from the first survey is shown in Table 2.
NEGOTIATOR TRAIT RANK AND WEIGHTS
(HIGHEST LEVEL PURCHASING EXECUTIVES). Table 2
TASK-PERFORMANCE CLUSTER
Rank Weight
1
2
3
4
5
6
7
15.0
8.3
7·8
7·7
6·4
3·4
1.2
Planning
Problem-solving
Goal-striving
Initiative
Product knowledge
Reliability
Stamina

AGGRESSlON CLUSTER
Rank Weight
1 13·0 Power exploitation
2 9·3 Competitiveness
3 8.g Team leadership
4 5.8 Persistence
5 5·0 Risk-taking
6 3·5 Courage
7 1.6 Defensiveness
SOCIALIZING CLUSTER
Rank Weight
1 13·1 Personal integrity
2 11.0 Open-minded
3 10·3 Tact
4 7.8 Patience
5 7·7 Personal attractiveness
6 4.8 Appearance
7 4·1 Compromising
8 1·5 Trust
COMMUNICATION CLUSTER
Rank Weight
1 11.g Verbal clarity
2 9·3 Listening
3 9·3 Coordinating skill
4 8.2 Warm rapport
5 6.g Debating
6 5·2 Role-playing
7 1·5 Nonverbal
SELF-WORTH CLUSTER
Rank Weight
1 11.g Gain opponent's respect
2 10.0 Self-esteem
3 9·4 Self-control
4 8.8 Ethical standard
5 6.2 Personal dignity
6 5·0 Gain boss's respect
7 3·9 Risk being disliked
8 1·7 Organizational rank

THOUGHT-PROCESS CLUSTER
Rank Weight
1
2
3
4
5
6
7
8
12.2
12.2
10.0
8.g
7·0
6·5
5·4
1.0
Clear thinking under stress
General practical intelligence
Insight
Analytical ability
Decisiveness
Negotiating experience
Broad perspective
Education
Purchasing executives were in general agreement that a
good negotiator must possess, above aU else, a high degree of
planning ability. They were least concerned with his educa-
tion, stamina and nonverbal-communication skills. As a result
of this survey we were, for the first time, in a position to
understand the relative importance of various traits. In addi-
tion, it was possible to use the data to measure negotiating
skill in a more objective fashion.
HOW OTHER PROFESSIONS SEE NEGOTIATION
The next opinion polls were designed to discover how
people in different professions look at bargaining traits. The
basic question was, "How do the attitudes of salesmen, engi-
neers, buyers and contract-management people differ?" What
about lawyers, accountants and retail buyers in the clothing
industry?
Four hundred and eighty-three professional negotiators
responded. The results were analyzed statistically and are
shown in appendixes I and II at the back of the book. You
will not be surprised to learn that there were significant differ-
ences between groups.

DIFFERENCES AMONG INDUSTRIAL
NEG O"T I A TOR S
Program managers, design engineers and supplier repre-
sentatives emerged as entrepreneural types while the other
industrial groups did not. Engineering program managers were
particularly individualistic. They placed greater emphasis on
objectives, ability to exploit power, willingness to take risks
and the need for discretion. They placed less stress on the
importance of business integrity and little weight on the ability
to create close personal rapport with an opponent. Program
managers were opportunity-oriented.
The design engineer's profile is almost as individualistic
as the program manager's. Design engineers stressed prod-
uct knowledge, self-control, discretion and perspective. They
severely downgraded insight, close personal rapport and risk-
taking. They emerged as men considerably more attuned to
facts and objectives than to the social aspects of negotiation.
Furthermore, those who are familiar with the high-safety
factors often built into engineering specifications will not be
surprised to learn that design engineers do not like to take
risks at the bargaining table either.
Supplier salesmen emerged as tough competitors. They
placed special value on product knowledge, persistence, intelli-
gence and business ethics but downgraded problem-solving
skills, debating ability and decisiveness. Supplier representa-
tives appear to be men who make a persistent effort to gain
objectives. They perceive negotiation as a contest of knowledge
and objectives in contrast to the buyers who place greater em-
phasis on the problem-solving and decisiveness aspects.
A fundamental difference in attitude exists between en-
gineering program managers and purchasing executives along
two dimensions. Program managers show a strong willingness
to risk being disliked while purchasing executives do not. In
addition, the latter express greater concern for ethics. It is

not surprising that value conflicts arise between these functions.
A similar but less serious division exists between contract
managers and program managers. Contract administrators value
caution, ethics and persistence while program managers place
less emphasis on these virtues and more on self-esteem and
the willingness to risk being disliked. Contract managers ap-
pear to be more bureaucratic in temperament than the men for
whom they negotiate.
DIFFERENCES AMONG COMMERCIAL
NEGOTIATORS
Commercial negotiators-that is, attorneys, accountants,
real-estate salesmen and retail-clothing buyers-viewed nego-
tiation in much the same way as those engaged in the indus-
trial field, with several notable exceptions. As a group, those
in commercial activities placed greater emphasis on analytical
ability, self-esteem and patience. The differences between
various professions is tabulated in appendix II and sum-
marized below.
Attorneys and accountants see negotiation as a problem-
solving affair rather than as a quest for reaching objectives.
No other professions surveyed were so emphatic on these
points. It should be noted that the real-estate and retail-buying
professions were outstandingly objective-oriented.
Real-estate people value initiative and willingness to take
risks more than most groups, but attach least significance to
planning. They and retail clothing buyers emerged as the in-
dividualists of the commercial group.
As the survey is expanded, two points become clear: 1)
the difference in opinion between various profesSiOns is sig-
nificant, and 2) when members of different profesSiOns assist
one another at the bargaining table they are likely to view
negotiation traits in diverse ways. A good team leader will

resolve these differences early and thereby avert conflict at
the bargaining table.
ASK A WOMAN
When in doubt, ask a woman. Since men spend haH their
lives negotiating with women, I decided to find out what they
thought. The results will not surprise those of us long married.
They expect us to plan well, know much about the subject
under discussion, take the initiative, try hard to reach our
goals and show good judgment in the process. They do not
lack for aspirations in what they wish for us.
Although most men ranked integrity among the four
most important traits, women assigned it a lesser place. Per-
haps some sociologist will ask them why-not I.
CONCLUSION
Those who know most about negotiation, the professionals,
have spoken. They collectively believe that the following
seven traits are most important:
Planning skill
Ability to think clearly under stress
General practical intelligence
Verbal ability
Product knowledge
Personal integrity
Ability to perceive and explOit power
From my experience and reading I would not quarrel
with these findings except to add a few that I consider essen-
tial. A negotiator must think well of himse1f. This feeling of
se1f-worth should come from a history of getting things done

satisfactorily and faith in one's ability to understand and re-
solve the fundamental values being negotiated.
The ideal negotiator should have a high tolerance for
ambiguity and uncertainty as well as the open-mindedness to
test his own assumptions and the opponent's intentions. This
requires courage. Finally, in every good negotiator there must
be an inner desire to achieve, to aspire, to take that sensible
but extra measure of risk that represents a commitment to
one's strivings. As Shakespeare said, "And pay the debt I never
promised"- to ourselves and those we represent.

PART II
The Heart
of the
Bargaining
Process

INTRODUCTION TO PART II. Imagine for a moment that
you are a doctor looking at this living, breathing thing called
negotiation. You want to understand what makes it work and
why. Where do you start?
On the surface, clearly visible, like external parts of the
body, are the two negotiators and their conflicting demands.
Also evident are techniques such as concession and threat as
well as a copious display of oratorical fireworks. Less apparent
are the internal organs. In every complex living thing there
lurks beneath the easily visible a net of interlinking systems
that preserve, maintain and enhance its being. So it is with
negotiation. To understand this subject we must go beneath the
surface to those elements that are common to all bargaining
transactions.
In Part II we will look at the heart of the bargaining
process. Our eyepiece will be focused on aspiration level,
goal-setting, power, persuasion and other aspects of the anat-
omy of negotiation. Only when these central elements of the
process are better understood will it be possible for us to
speak intelligently about strategy and tactics.

CHAPTER 4
WHAT'S
YOUR ASPIRATION
LEVEL?
THAT LOW MAN SEEKS A LITTLE THING TO DO,
SEES IT AND DOES IT;
THIS HIGH MAN, WITH A GREAT THING TO PURSUE,
DIES ERE HE KNOWS IT.
THAT LOW MAN GOES ON ADDING ONE TO ONE,
HIS HUNDREDS SOON HIT;
THIS HIGH MAN, AIMING AT A MILLION,
MISSES A UNIT.
I WORKED FOR A MENIAL'S HIRE,
ONLY TO LEARN, DISMAYED,
Robert Browning
THAT ANY WAGE I HAD ASKED OF LIFE,
LIFE WOULD HAVE PAID.
Jessie B. Rittenhouse
......
About forty years ago some of the finest minds of the twentieth
century began to wonder why some people were under-
achievers at school and at work. Their attention soon became
focused on the question of aspiration level and success. Re-

42 The Hearl of the Bargaining Process
cently two professors tried an experiment.I) They built a
barricade between bargainers so that neither could see or
hear the other. Demands and offers were passed under the
table. Instructions to both were identical, with one exception:
one was told he was expected to achieve a $7.50 settlement
and the other $2.50. The experiment was designed to favor
neither party-that is, both had an equal chance to get $5.00.
What happened? Men who expected $7.50 got $7.50 while those
told to expect $2.50 got $2.50.
The conditions in the experiment described in Chapter 2
were different. Where the professors' subjects were students,
ours were professionals; where they limited communication
between negotiators, we created face-to-face encounter;
where they induced an artificial level of aspiration, we let
each man decide for himself. What good negotiators know will
happen happened: subjects with high aspirations got high
settlements; those who wanted little got little.
Interestingly, those who were successful and those who
were not expressed equal satisfaction with the outcome. I can-
not recall the last time a negotiator returned from a conference
and reported dissatisfaction with an agreement. When people
want and expect less, they are satisfied with less. John Mase-
field, the English poet, may have had this in mind when he
said, "Success is the brand on the brow of the man who
aimed too low."
In life, as in negotiation, it appears that those with high
aspirations reach higher goals. The question we must ask is,
"Do men bring lifelong aspiration patterns into the conference
room?" I believe they do. There is a growing body of evidence
that supports this contention.
The time has come to consider aspiration level in its
relationship to goal-setting, risk-taking, self-esteem, persistence
and success. Of all the journeys into negotiation, this is perhaps
the finest trip of all

What's Your Aspiration Level? 48
GOAL-SETTING BEHAVIOR
People set goals for themselves even when they are un-
aware they are doing so. The person deciding between an
Oldsmobile and a Cadillac is saying something about his
status goals. The person deciding between dropping out of
high school or continuing through college is assigning himself
a place in SOciety. The executive willing to tolerate a mediocre
staff is indicating his own standard. Our role is to learn how
people set goals and to apply this knowledge to negotiation.
An individual's level of aspiration represents his intended
performance goal. It is a reflection of how much he wants-
that is, a standard he sets for himself. It is not a wish but a
firm intention to perform that involves his self-image. Failure
to perform results in loss of self-respect Given such a harsh
definition of "aspiration level," we will direct our attention to
how goals are established.
We should imagine an athlete who has just run the
loo-yard dash in ten seconds. H the runner is competitive he is
likely to try for 9.9 seconds in his next race. H the next race
is run in ten seconds he will experience disappointment. On
the other hand the runner will be elated if he lowers his
record. Thus we see four steps in goal-setting: I) starting per-
formance (ten seconds), 2) establishing a level of aspiration
(9.9 seconds), 3) subsequent performance (9.9 seconds) and
4) feelings of success.
Americans are racing through life trying to maintain or
exceed present levels of achievement. We set targets for occupa-
tion, income, status and power. The world provides a quick
feedback, thereby causing us to continuously reassess our
aspiration levels and set new goals.
A Fortune study asked people about their lifetime-income
goals. Men earning $5,000 a year reported they would be happy

44 The Heart of the Bargaining Process
with slightly more than $5,000. Men earning $20,000 a year
wanted slightly more than $20,000. Each income level revealed
that their level of aspiration was directly related to present
earnings. The poor did not aspire to income levels of the middle
classes. They assigned themselves to the lower classes on the
basis of past performance. Level of aspiration is a yardstick by
which we measure ourselves.
CROUP MEMBERSHIP AND ASPIRATION
Although aspiration level is an individual matter, one can
hardly think about it without recognizing that objectives are
not established in a social vacuum. Group membership plays
an important role in providing the frame of reference by which
people decide the appropriateness of their targets.
A man may decide how much he wants in three ways:
1) on the basis of his own past performance, 2) on the basis of
the performance of other members in his direct group and 3) on
the basis of the performance of those in reference groups to
which he would like to belong.
For example, an executive may set an income target on the
basis of his present salary, $25,000 per year, or that of other
executives in aerospace, $28,000, or that of executives doing the
same work in rapidly growing conglomerates, $35,000 plus stock
options. In any case, once a reference target is chosen, it be-
comes a yardstick by which self-esteem is measured.
Corporations set goals in the same way. That is why it is
so important for a company to have a self-image. An 8 percent
return on an investment may be fine if a company is comparing
itself to a group of old-line competitors. On the other hand,
the.8 percent return can look pretty bad when measured against
an aggressive organization such as Republic Corporation. Ex-
ecutives must not only ask where they stand, but compared with
whom.

In negotiation it is only rarely possible to compare one's
perlormance with that of others. Comparisons are, of course,
possible where precedent decisions have been made or other
guidelines exist. A negotiator normally has some data to guide
him, but the range of uncertainty is so large and subject to so
much interpretation on fairly complex deals that outside ref-
erence points are not as useful. In fact they may actually be
dangerous, for they may lull the negotiator into a false sense
of security and cause him to accept inappropriate agreements.
Group membership plays a role in establishing negotiation
targets because it is invariably a decision group that par-
ticipates in the goal-setting process. Each member of the de-
cision group has a different aspiration level. Team obiectives
are themselves a product of negotiation between decision-group
members. It is essential to recognize that all organization goals,
negotiation and otherwise, are determined by a group-bargain-
ing process.
SUCCESS AND FAILURE
Each demand and concession contributes to an opponent's
feelings about success or failure. It is therefore worthwhile to
know more about the mechanism by which success is experi-
enced. Three points should be understood.
First, success is relative. It depends upon what is wanted.
I consider myself pretty successful if I can wake up and go to
work. My neighbor considers himself a failure unless he runs
two miles before breakfast. In the experiment, some men in-
sisted that they would accept nothing less than $700,000 while
others were quite content with $200,000. As the psycholOgist
Alfred Adler said, "What an individual feels as success is
unique with him."
Second, people typically raise aspirations after success and
reduce them after failure. If they enjoy a great success, they

tend to set much higher goals than if success is moderate. When
failure is moderate, there is a tendency for people to reduce
aspirations slightly. A massive failure is normally followed,
however, by a sharp drop in aspiration level.
Third, a person does not experience success or failure every
time he does something. He gets little satisfaction from doing a
simple task and feels no sense of defeat if the job is too far
above his capability. Only if a task lies close to the upper limit
of his ability does a man become involved enough to feel good
or bad about performance. It follows that behind every experi-
ence of SUC~e{~S or failure lies conflict. On the one hand a person
tends to set iower targets because he fears failure; on the other
he tends to set higher targets because he desires success.6
It is wise to consider every maneuver and technique in
terms of its effect on the opponent's feelings about success and
failure. A moderate offer on the negotiator's part may be con-
sidered a massive success by an opponent who has low aspira-
tions and may encourage him to revise his goals upward to
unrealistic limits. Everything that is done during negotiation
should be designed to change the opponent's level of aspiration
in the desired direction through the success-failure mechan-
ism. More will be said in Chapter 14 about how techniques
like concession can be designed to affect the opponent's aspira-
tion level and concept of success.
THE ACHIEVEMENT MOTIVE AND SUCCESS
Some years ago the :fiery leader of the Soviet Union, Nikita
Khrushchev, made a dramatic visit to the United States. Every-
where he went he made trouble. When invited to a dinner by
the Mayor of Los Angeles, Khrushchev treated his hosts to a
speech on how the Soviet Union was going to "bury" the United
States. After visiting a :film studio he came away announcing
disgust at our vulgar taste in producing something as silly as

"Can Can." However, Khrushchev made one speech in which
he was profoundly correct, although the point made was not
what he had intended.
The Soviet leader, when asked to give a short address to
luncheon guests of the movie tycoon Spyros Skouras, decided
that he would contrast a Soviet industrial commissar in his
group with the host. The Russian asked his commissar to
stand up in front of television cameras and then proceeded to
tell the American people that this immensely powerful repre-
sentative of Soviet industrial might was more productive than
Skouras but owned nothing but the pants he stood in. For
once Khrushchev was right, but it took a profound study by
a distinguished American psychologist to prove his point.
David C. McClelland in his fine book, The Achieving So-
ciety, points out that persons with strong achievement drives
demand more of themselves in performing challenging tasks.7
They work harder, do a better job and value accomplishment
more than reward. High-need-for-achievement individuals want
rapid feedback from their work. They are interested in money
as a symbol of successful accomplishment and not as an end
in itself. Furthermore, McClelland found that successful execu-
tives everywhere, communist, socialist or capitalist, were high
in need for achievement. In that sense Khrushchev implied
that Spyros Skouras, had he been a Russian, would have been
a mighty commissar with one pair of pants. As we shall soon
see, success, need for achievement, expectations and aspiration
level are intimately related.
RISK-TAKING AND EXPECTATION
How do you find your wife in the department store when
you lose her? Thomas C. Schelling believes that to find her you
do not go to where you think she is. Instead, you ask yourself
where you expect her to go based on her expectations about

where you will go. Schelling is convinced that real world nego-
tiations are settled when expectations of both parties converge
as they do in his department-store illustration.s Perhaps we
should have settled the Vietnam war in 1965 by letting Presi-
dent Johnson find Ho Chi Minh in Macy's department store
during the Christmas rush. Be that as it may, there is little
question that expectations play a crucial role in bargaining,
particularly in the area of risk-taking and aspiration level.
Expectations are associated with the achievement motive.
People with a high need for achievement behave as though they
expect success. John W. Atkinson, a colleague of McClelland,
posed this question: "I know that people with a high need for
achievement tend to be successful but I want to know how they
actually behave in ways that tum out well?" He developed a
theory that involved expectation, risk, achievement motive and
incentives.9
Atkinson reasoned that men are tom between the rewards
that come from success and the dangers that come from failure.
They are driven by a desire for success and a fear of failure.
People choose goals that are likely to prOvide the most personal
satisfaction conSidering 1) need for achievement, 2) reward,
3) risk of failure and 4) expectations of success. People cannot
make this computation consciously. Instead, they reason it out
as best they can based on their past history of success and
failure in similar situations.
The Atkinson Aspiration Model, shown in Figure 2, says
that individuals set their aspiration level by evaluating the
pleasure of success against the displeasure of failure. They
strive to reach goals that maximize the total attractiveness of
the task. However, the first thing that strikes us about the
diagram is that persons with a strong desire for success do not
look at risk in the same way as those who stress the avoidance
of failure. The success type prefers risks in the 50-50 range
while the failure-type prefers short or long odds. Success-
oriented people maximize task attractiveness by setting their

level of aspiration where they can athibute success to their own
abilities. People with a high fear of failure avoid reasonable
challenges because it threatens their seH-image. Hthey set low
goals, they cannot fail. H they set goals so high that the prob-
ability of success is slight, they can feel comforted by the fact
that failure was inevitable anyway. In either case their goal-
setting behavior preserves rather than threatens seH-esteem.
Experiments have confirmed much of this theory. In-
vestigators found that achievement types are optimistic and
tend to overestimate the likelihood of success while fear-of-
failure types do not. Success-oriented people, in contrast to
those who fear failure, do not like pure gambling, for they get
little satisfaction from winning when their own skill is not in-
volved.
Related studies confirm that individuals tend to estimate
probability of success in terms of hopes as well as facts. When
they want something very badly, they overestimate their
chances of getting it. When people were asked, "What score
would you like to get next time?" they were not as realistic
j
Motive to achieve (Ms )1S..rl
~:g
" ~/~ '..... .....'!! .........._--....
:tI Motive to avoid failure (MF )
~
0 0.50 1.00
Probabi1ity of success (Ps )
Figure 2. ATKINSON ASPIRATION MODEL

in setting goals as those who were asked, "What score do you
expect to get next time?" In one case self-image was involved;
in the other it was not.
On the basis of Atkinson's research we are in a better po-
sition to see how people with high achievement needs behave in
ways that turn out well. Achievement-oriented individuals ap-
proach tasks in a confident manner. Having been successful
in the past, they are enthusiastic about new challenges in-
volving personal skill. They are willing to stake their self-
image on risks in the 50-50 range..The fear-of-failure person is
pessimistic; having been somewhat of a loser all along, he is
afraid to stake his self-image on the next contest. He therefore
prefers risks where the probability of success is high or low
rather than in the middle range.
In negotiation, success-oriented people will tend to set
targets higher and be more optimistic of their chances for
success. The others will find ways to play it safe.
PERSISTENCE AND ASPIRATION
A negotiator enters the conference room with a level of
aspiration and adjusts his goals in response to encouragement
or frustration. Most men raise aspirations when they succeed
and lower their sights when they fail. The degree to which they
follow this typical pattern differs because some men are more
persistent than others.
Experiments indicate that success-oriented men are not
always persistent. When a task is easy they quickly lose interest.
On the other hand, achievement-oriented persons were found
to be more persistent when a task was thought to be easy but
proved frustrating. They enjoyed the unexpected challenge and
responded to overcome it.
Fear-of-failure persons tend to persist longer when the

odds against success are very long or very short. They are less
persistent in the middle range of success probability.
In our experiment, skilled men with power did not exploit
unskilled opponents. The explanation may lie in the Atkinson
aspiration theory, which predicts that success-oriented nego-
tiators would lose interest as success became assured. A review
of the concession data indicated that low-power defendants
were conciliatory, thereby causing the powerful skilled plaintiffs
to lose interest even faster.
The same thing happens in sports occasionally when a top
team is defeated by a third-rate competitor. John Wooden,
basketball coach of the college-champion UCLA Bruins, at-
tributed his team's two defeats in 100 games to the letdown
associated with a string of easy victories prior to the losses.
Atkinson's experimental studies indicate that persistence,
expectation and risk-taking are related. For those who manage
men who negotiate, the findings should give rise to thought.
Skilled men lose interest in tasks that offer little chance of
success. They give up more quickly than their less gifted coun-
terparts. Perhaps that is why Sir Francis Bacon cautioned the
prince to use "absurd men for business that doth not well bear
out itself." Be that as it may, in our experiment highly skilled
men who faced more powerful opponents were pessimistic,
lowered their aspirations and did not do well.
REALISM, ASPIRATION AND MENTAL HEALTH
It's good to have high aspirations, but it's not good if they
are so high as to be unrealistic. There are many people in
mental hospitals whose aspirations outstripped their capabili-
ties. The reality of daily living is a stem taskmaster that pro-
vides rapid feedback to those whose goals are unrealistic.
A person's mental health is related to his self-esteem. The

tendency to raise aspiration levels as high as possible is closely
related to self-esteem. An individual's level of aspiration is
determined by his ability and his history of success and failure.
Mentally healthy people tend to accept themselves in a
favorable light. They have a sense of self-identity, know how to
test reality and how meet their needs. They set goals that
are consistent with their capabilities and the demands of the
outside world.
There is a growing body of evidence that mental health is
related to realistic goal-setting. In 1963 a researcher classified
three groups of subjects as normal, neurotic or psychotic.10
The subjects then performed an aspiration-level task that in-
volved shooting a pinball down a track containing a series of
holes into which the ball could fall. Each hole represented a
different score value. The holes were spaced so that subjects
could decide for themselves whether to try for high scores with
low probabilities of success or low scores with high probabili-
ties. In a second version of the test the element of frustration
was introduced by inserting magnets into the setup. These
magnets deHected the balls and made it difficult to predict
outcome.
The investigator discovered that realistic goals were chosen
by people who were better adjusted. Maladjusted people
were attracted to targets that offered little chance of success
even when they knew beyond a doubt that the odds were very
poor. Neurotics chose targets that were less realistic than those
of normal persons and more realistic than those of psychotics.
All groups reacted to frustration by shOWing an increased
tendency toward unrealistic behavior. However, it was the
neurotics who were most affected. The results of this experi-
ment were consistent with others, which indicate ·that people
low in self-esteem perform a larger number of unbalanced acts
under pressure than persons who think well of themselves.
It appears that stable people react to success and failure
experiences in a typical fashion-that is, they raise or lower

goals accordingly. Those who are not stable behave unrealisti-
cally; they sometimes raise aspirations in response to serious
failure or lower their goals in response to success. In any case
the mental maturity of a negotiator is directly relevant to his
ability to set realistic goals.
PERSONALITY AND ASPIRATION-AN
OVERVIEW
In the light of recent experimental findings we may draw
some conclusions about the relationship of personality to aspira-
tion level. The achievement-oriented person is attracted to
tasks that involve skill. Unlike the gambler, he prefers to take
mid-range risks and tends to be realistic. He likes to do a job
well for its own sake, and he is a persistent striver who believes
that hard work pays off. This type of person tends to approach
ambiguous situations with confidence of success, enthusiasm
and optimism.
Achievement-oriented persons take a long-term view of
life. They plan and direct their energies to projects that take
time to complete. They are problem-solvers and obstacle-
removers, patient, determined and competitive. When they have
a job to do and need help, they choose experts. On the job
they tend to talk about business rather than other matters. They
have a lesser need for closure and black-and-white solutions
than those who are not achievement-oriented.
The achievement-oriented person expects success and
therefore sets his aspiration level high. He succeeds because he
is realistic, persistent and receptive to feedback.
CONCLUSION
Negotiation is one of the last frontiers of old-fashioned en-
trepreneurship in American business today. It is best carried

out by men with a high need for achievement-that is, by men
who are entrepreneurs. TheSe are the aggressive men who
get things done in our society: the reasonable risk-takers who
view the challenge of negotiation more as an opportunity
than a problem.
We want negotiators who will set their sights high and
commit themselves to achieving their objectives. Yet we must
recognize that men, even those with strong achievement needs,
will not knOwingly design the club with which to beat them-
selves to death. For that reason management must take a more
courageous role in negotiating a realistic aspiration level with
its own negotiators. Too often management "cops out" by telling
its representatives to do the best they can. That's not good
enough.
It was Shakespeare who said,
"-OUR DOUBTS ARE TRAITORS,
AND MAKE us LOSE THE GOOD WE OFT MIGHT WIN
BY FEARING TO ATTEMPT."
Both management and those who negotiate must learn to
test these doubts by asking each other, "What's your aspiration
level, and why?" They will probably find that their aspirations
in negotiation as in life are not as high as they should be.

CHAPTER 5
YOU
HAVE MORE POWER THAN
YOU THINK
POWER CONCEDES NOTHING WITHOUT A DEMAND. IT NEVER
DID, AND IT NEVER WILL. FIND OUT JUST WHAT PEOPLE
WILL SUBMIT TO, AND YOU HAVE FOUND OUT THE EXAer
AMOUNT OF INJUSTICE AND WRONG WHICH WILL BE IM-
POSED UPON THEM; AND THESE wn.L CONTINUE TILL THEY
HAVE BESISTED WITH EITHER WOBDS OR BLOWS, OR WITH
BOTH. THE LIMITS OF TYRANTS ARE PBESCRlBED BY THE
ENDURANCE OF THOSE WHOM THEY SUPPBESS.
Frederick Douglass
On August 23, 1968, President Ludvik Svoboda of Czecho-
slovakia told Communist Party boss Leonid I. Brezhnev in his
Kremlin office, "If I kill myself, my blood will be on your
hands and no one in the world will believe you did not murder
me." Svoboda threatened suicide unless the Russians freed the
liberal leaders whom they had seized three days earlier. The
threat was successful. According to a report released by the
Los Angeles Times on September 23, 1968, the Russians
promptly released the Czech leaders and permitted them to
participate in ensuing negotiations. Had it not been for the

courage of the seventy-three-year-old Svoboda, these men
might have perished in a Moscow jail. Considering the bravery
of these people against an occupying power, one cannot help
wondering whether they might have held Hitler at bay thirty
years earlier. Svoboda and the Czechoslovaks do not perceive
power as other subjugated people do.
Power relationships exist everywhere. The form. may be
black, green, military or political. In this chapter we will find
out what power is and why some people are intimidated by it
while others are not.
Americans generally assume that the powerful party in a
negotiation will exert the greatest influence. But we are begin-
ning to wonder if this common-sense notion is true. At many
universities students have captured administrative offices; in
France a strike that enguHed the nation and Charles DeGaulle
began With a routine demonstration at the Sorbonne; Senator
McCarthy, campaigning without funds in New Hampshire,
captured the imagination of Americans and helped to unseat
an incumbent President; in Vietnam a fourth-rate power has
successfully repulsed the United States. Power, like beauty, is
to a large degree a state of mind.
THE BASIC PRINCIPLES OF POWER
One step in preparing for negotiation is to evaluate the
power balance between opponents. Such an analysis is not
possible unless the prfuclples o~ power are understood. For
practical purposes power may be" defined as the ability of a
negotiator to influence the behavior of an opponent. The eight
principles listed below are applicable to most transactions.
First, power is always relative. Rarely if ever does a buyer
or seller enjoy complete power.
Second, power may be real or apparent. The fact that a
position is supported by lOgic, justice or force does not guar-

You Have More Power Than You Think 57
antee success. A seller may be in a preferred position, but if
neither he nor the buyer perceives the advantage, he has none.
Conversely, the seller may be in a weak position due to lack of
business, but if the buyer does not perceive this, the buyer's
power is not enhanced.
Third, power may be exerted without action. If an op-
ponent believes that action can and will be taken against him,
it may be unnecessary to act.
Fourth, power is always limited. Its range depends upon
the situation, government regulations, ethical standards and
present or future competition.
Fifth, power exists to the extent that it is accepted. A
buyer who insists that he will not be exploited by a monop-
olistic seller is less likely to be victimized. Some people are
simply less willing to be dominated than others and would
rather do without than be exploited.
Sixth, the ends of power cannot be separated from the
means. One cannot hope to develop a loyal customer by using
exploitive tactics. Several years ago we did business with a
ruthless supplier because it was to our best interest to do so.
The supplier, an aggressive conglomerate, was aware of its
bargaining position and took the occasion to be uncompromis-
ing and disrespectful to our people. It was a short-lived victory,
for it is now distrusted by industry and government buyers
alike.
Seventh, the exercise of power always entails cost and risk.
Eighth, power relationships change over time. The balance
of power moves as the balance of benefits and contributions
from the parties change.
These principles are applicable over a wide range of ex-
change situations. The follOwing story illustrates many of the
principles in a bargaining situation that would challenge even
Arthur Goldberg.

THE ESKIMO AND THE TRADER
Peter Freuchen in Book of the Eskimos describes how the
Eskimo negotiates. In the frozen Arctic a single trading post
may service trappers hundreds of miles away. For most of the
year families trap in the North Country. They return twice an-
nually for replenishment of necessities. If ever one sought to
find a true monopolist, the trader would be an ideal. model.
When a trapper returns from the wilderness he carefully
parks his sled in a place where townspeople can see the size
of the tarp-covered load and some of its quality furs. After
friendly and extensive solicitations concerning the good health
of the storekeeper, the Eskimo explains how poor his catch is
and how ashamed he is to offer such shoddy pelts in exchange
for handsome store goods.
Although no verbal offer is made, the Eskimo walks slowly
through the store pointing to items that he feels "unworthy of."
Next day he repeats this process in the presence of his poor but
dignified family. As the children gape at the candy jar the
Eskimo again bemoans his lack of skill as a trapper, all the
while continuing to congratulate the trader on the quality and
diversity of his goods and pointing out that the wise trader
deserves the prosperity he enjoys.
On the next day, with the trader and townspeople present,
the tarp is removed. The parties then get down to business,
with the Eskimo again pointing out items that he is "too
humble to be worthy of" while a wordless tally is kept by both.
As the bargaining proceeds the participants become more open
with each other, revealing their true needs and values. After
patient discussion the parties strike an agreement, deliberately
leaving some matters open for future adjustment.
On his last day in town the Eskimo drops by the store to
say good-bye and sadly acknowledges that he has forgotten to
include some staples such as matches and candies. The trader

promptly provides these items without charge. As the family is
about to leave civilization once more, the trapper discovers a
few superb pelts that were overlooked previously. These he
provides to the trader as a departing gift.
The Eskimo knew that there are many bases of power
other than competition or financial leverage.
SOURCES OF POWER
There are nine sources of strength that contribute to the
overall balance of power between opponents. These are:
1. BALANCE OF REWARDS. Rewards may be of a tan-
gible or intangible nature. Money, property, rights, and privi-
leges are of a tangible nature. Financial rewards need not be ex-
pressed in profit alone but may come about as a result of goals
associated with cash How, liquidity, borrowing power, partial
coverage of fixed costs, maintenance of specialized productive
resources or return-on-investment targets. Rewards may also
be long run-that is, a result of expanded markets, products or
channels of distribution.
Intangible rewards may proVide an equally important base
of power. Among these are benefits that fill needs for safety,
love, worth and self-realization. A sales manager's personal
need to prove himself may weigh more heavily in the reward
structure than the profit to be gained from the sale.
Although reward is a critical element in the balance of
power, it is usually analyzed superficially. Rarely is a thorough
worth-analysis made to discover the hidden factors in an op-
ponent's reward structure. It's not easy to do a first-rate reward-
analysis, but it is worthwhile to try.
2. BALANCE OF PUNISHMENT OR NONREWARD.
One of the first lessons we learned as children is that parents
can punish as well as reward. A seller can punish a buyer by
circumventing his authority or by harassing him with minor

changes. A buyer can punish a seller by threatening to remove
him from a bidder's list or by rejecting a product for minor
quality Haws irrelevant to its end use. Deadlock is an interest-
ing form of punishment that leaves both parties in an un-
pleasant state of uncertainty.
In most business transactions the parties are confronted
with the possibility of losing something desirable rather than
with direct punishment. A seller faced with the possibility of
losing an order or a buyer denied the productive services of a
valued supplier are under pressure to agree. I have attended
negotiations where the central issue was not price, specification
or delivery but whether we could cajole, inspire or otherwise
induce the supplier to commit himself to take on the job. When
times are good, reputable sellers can pick and choose their
customers and often make their decision on criteria other than
profit. In such a case the buyer's ability to nonreward the seller
is minimal.
Punishment and nonreward may be tangible or intangible.
When collective bargaining fails and a strike takes place, both
parties suffer tangible costs. Psychological punishment may be
inflicted by creating tension, uncertainty and loss of confidence
at the conference table. The ability to punish or withhold re-
ward goes hand-in-hand with the exercise of influence.
3. BALANCE OF LEGITIMACY. No other source of
power is so hypnotic in its effect as legitimacy. We have learned
to accept the authority of ownership, tradition, appointment
and laws to such an extent that we fail to question their ap-
plicability in changing situations. It is the attack on legitimacy
by militant blacks and whites that so disturbs our society.
Legitimacy is a source and symbol of power.
For the buyer, legitimacy can be enhanced through laws,
procedures, procurement regulations or review agencies such
as fair-trade commissions. The government exerts influence
through its elected role and through the media of public
opinion and congressional investigation. A seller can enhance

his legitimacy through institutional advertising, trade associa-
tions and political pressure. Even the seller's right to a fair
profit and the buyer's right to a fair price have a legitimacy
deeply rooted in our culture. In each case the principle is the
same: the buyer, the seller and the government are building
strength on the basis of higher institutional or cultural au-
thority.
4. BALANCE OF COMMITMENT. Commitment, loyalty
and friendship are benchmarks of power. Those with teenage
children are aware that one of the strong bases of parental
authority is associated with companionship rather than ma-
terial rewards. Managers often learn that a mediocre worker
who is committed to company objectives may be more effective
than a talented but less dedicated man.
In a marriage, the party who cares most about maintaining
the relationship gives up a degree of power to the party who
is less committed. The commercial and diplomatic world do not
differ in this respect. Purchasing executives have long realized
that buyer and seller must be committed to each other's long-
range interests if a satisfactory business relationship is to exist.
5. BALANCE OF KNOWLEDGE. Knowledge and the
control of information is power. The more a negotiator knows
about an opponent's objectives and bargaining position the
stronger he is. Knowledge of product, marketplace, legal
phraseology and regulations is also a source of strength. By the
same token, a thorough understanding of the theory and prac-
tice of profeSSional negotiation is an essential ingredient· of
power.
6. BALANCE OF COMPETITION. Competition has an
important effect on bargaining power. The seller who can keep
his plant busy on other work and the buyer with multiple
sources are in a strong bargaining position.
Competition can also be created in other ways. A buyer
may increase competition by bringing other economic forces

into the transaction. For example, he can urge that the com-
pany make a product rather than buy it, or he can entice manu-
facturers from other fields into the marketplace. Sometimes an
end product can be redesigned in order to eliminate depen-
dency upon an exploitive vendor. Competition can be enhanced
by providing funding, facilities, tooling and knowledge to
otherwise marginal second-source suppliers.
A seller may improve his competitive position by develop-
ing a unique knowledge or facility base. He may also purchase
other companies, which improves distribution channels and
makes him less dependent upon specific customers or seasonal
variations.
Last but not least, it is possible to improve one's com-
petitive position by the simple expedient of selecting negotia-
tors who are personally competitive: men who enjoy struggle
and have a strong desire to win.
7. BALANCE OF UNCERTAINTY AND COURAGE.
Security is a goal that humans cherish. We share a desire to
avoid risk wherever possible. The person who is willing to ac-
cept a greater burden of uncertainty with respect to reward
or punishment enhances his power.
Uncertainty may be based on fear and prejudice rather
than rational grounds. For example, two of my friends are
lawyers whose incomes have risen over a ten-year period from
$15,000 to $45,000 a year. One is always fearful that next year's
business will slip back to the $15,000 level. The other has faith
in his future growth and generally negotiates higher fees.
People assess risk differently even when they have access to
the same information. A common stock which looks like a
speculation to a man who lived through the depression can
appear a sound investment to a young man. By the same token,
I know some very intelligent people who lived through the real-
estate decline of the thirties. They are still renting apart-
ments in areas where land values have risen tenfold due to
population pressures.

Some risks can be foreseen while others cannot. The owner
of a machine shop estimates a tight tolerance job on the basis
of a 10 percent scrap rate. His past experience with rejections
on close tolerance work permits a rational estimate to be made.
On the other hand, he cannot foresee that the internal structure
of a particular batch of material will be too porous to hold the
necessary dimensions.
Uncertainty can be created by introducing risk at a per-
sonal as well as corporate level. Deadlock introduces the possi-
bility that a good negotiator can lose his reputation. Risk can
be heightened by introducing matters in which the opponent's
knowledge or ability to grasp a situation is deficient.
Courage plays a part in the decision to make a concession,
to hold one's ground, or to force a deadlock. In personal in-
jury work the insurance claims manager can never be sure
that his low offer will precipitate costly litigation. Conversely,
the claimant can only hope that a final verdict will justify his
reluctance to accept an earlier offer. It takes courage to tolerate
uncertainty, and we differ in our ability to do so.
8. BALANCE OF TIME AND EFFORT. Time and pa-
tience are power. The party that is most constrained by time
limits prOVides the opponent with a base of strength. It is for
this reason that purchaSing executives stress the importance
of lead time and early-warning inventory systems.
Buying, selling and negotiation are grueling work, and the
willingness to work is power. Perhaps the hardest work of all
is imposed on us by the demands of planning and deadlock.
Both can easily be avoided: one by nonplanning and the other
by agreement. The party most willing to work hard gains
power. Some people are simply lazy and thereby forfeit this
important source of strength.
9. BALANCE OF BARGAINING SKILL. Bargaining skill
is power, and that's what this book is all about. The ability to
plan, to persuade, to manipulate perceptions, to mobilize bias,

to analyze power and decision-making, to select effective
people and to understand the theory and anatomy of negotia-
tion constitutes a base of power available to buyer and seller
alike. Can anyone afford to relinquish this source of strength?
PERCEIVING POWER
Power, notwithstanding its source, must be perceived if it
is to exist. Two ingredients of perception are essential: the
bargainer must know or think he has power while his opponent
must believe that power exists and accept its authority. Figure
3 represents a concept of power that incorporates three ele-
ments: sources, perception and negotiation anatomy.
To perceive power objectively, it is not enough to simply
ask, "How much power do I have in relation to my opponent?"
The questions that should be asked fall into two ~tegories:
A. Questions related to Negotiator's power:
1. How does Negotiator perceive his own power?
z. How does Negotiator believe that Opponent per-
ceives Negotiator's power?
3. How does Negotiator want Opponent to per-
ceive Negotiator's power?
B. Questions related to Opponent's power:
1. How does Negotiator perceive Opponent's
power?
z. How does Opponent perceive his own power?
3. How does Opponent want Negotiator to per-
ceive Opponent's power?
Perception plays a major role in creating bargaining power.
The manager of a car agency remarked that the average buyer
is his own worst enemy. There are many cars to choose from
in Los Angeles, but buyers tend to fall in love with a specific
model after shopping around for a few days. Once the choice

is made, the buyer forfeits the advantages of a competitive
market. An alert salesman perceives and exploits this shift in
power by raising the price through extras. If the buyer stopped
to analyze his perception of power prior to final agreement, he
would be inoculated against lowballing and thereby avoid the
purchase of high-priced extras, which were never wanted in
the first place.
1...0
8
~I:Q
...0
8
!a
"S
QI
I:Q
...0
Anatomy of
negotiation,
the subprocesses
"N" - Negotiator
"0" - Opponent
Figure 3. POWER AND PERCEPTION MODEL

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